Appendix. Cambodia: Effects of Changes in the U.S. Federal Funds Rate on Macroeconomic Variables
Baliño, T., A. Bennett, and E. Borensztein, 1999, Monetary Policy in Dollarized Economies, IMF Occasional Paper No. 171, (Washington: International Monetary Fund).
Berg, A., and E. Borensztein, 2000, “Full Dollarization: The Pros and Cons,” IMF Economic Issues No. 24, (Washington: International Monetary Fund).
Bufman, G., and L. Leiderman, 1993, Currency Substitution under Nonexpected Utility: Some Empirical Evidence, Journal of Money Credit, and Banking. Vol. 25, No. 3 (August 1993, Part I), The Ohio State University Press.
Coe, D. T., I. Lee, W. F. Abdelati, R. H. Eastman, S. Ishikawa, A. Lopez-Mejia, S. Mitra, S. Munoz, K. Nakamura, N. Rendak, and S. Yelten, 2006, Cambodia: Rebuilding for a Challenging Future (Washington: International Monetary Fund).
de Zamaróczy, M., and S. Sopanha, 2002, “Macroeconomic Adjustment in a Highly Dollarized Economy,” IMF Working Paper No. 92, (Washington: International Monetary Fund).
de Zamaróczy, M., and S. Sopanha, , 2003, Economic Policy in a Highly Dollarized Economy: The Case of Cambodia, IMF Occasional Paper No. 219, (Washington: International Monetary Fund).
Erasmus, L., J. Leichter, and J. Menkulasi, 2009, “Dedollarization in Liberia—Lessons from Cross-country Experience,” IMF Working Paper No. 09/37, (Washington: International Monetary Fund).
Galindo, A., L. Leiderman, 2005, “Living with Dollarization and the Route to Dedollarization,” Inter-American Development Bank Working Paper No. 526, New York.
Goux, J., and C. Cordahi, 2007, “The International Transmission of Monetary Shocks in a Dollarized Economy,” GATE Working Paper, Groupe d’Analyse et de Théorie Économique, France.
Herrera, L., and R. Valdés, 2005, “De-dollarization, Indexation and Nominalization: the Chilean Experience,” The Journal of Policy Reform, Vol. 8, No. 4, 281–312, December.
Humpage, O., 2002, “An Incentive-Compatible Suggestion for Seigniorage Sharing with Dollarizing Countries,” Discussion Paper No. 4, June, (Cleveland Federal Reserve Bank).
Ize, A., and E. Yeyati, 2005, “Financial De-dollarization: Is it for Real?” IMF Working Paper No. 187, (Washington: International Monetary Fund).
Kokenyne, A., J. Ley, and R. Veyrune, 2010, “Dedollarization,” IMF Working Paper No. 188, (Washington: International Monetary Fund).
Menon, J., 2008, “Cambodia’s Persistent Dollarization: Causes and Policy Options,” Working Paper Series on Regional Economic Integration No. 19, Asian Development Bank.
Obstfeld, M., and K. Rogoff (1995), “The Mirage of Fixed Exchange Rates,” NBER Working Paper Series, No. 5191 (National Bureau of Economic Research).
Powell, A., and F. Sturzenegger (2000), “Dollarization: The Link between Devaluation and Default Risk,” Business School, Universidad Torcuato Di Tella.
Prasso, S., 2001, “The Riel Value of Money: How the World’s Only Attempt to Abolish Money Has Hindered Cambodia’s Economic Development,” Asia Pacific Issues No. 49, East-West Center.
Reinhart, C., K. Rogoff, and M. Savastano, 2003, “Addicted to Dollars,” NBER Working Paper 10015 (Cambridge, Massachusetts: National Bureau of Economic Research).
Rennhack, R., and M. Nozaki, 2006, “Financial Dollarization in Latin America,” IMF Working Paper No. 7, (Washington: International Monetary Fund).
Unteroberdoerster, O., 2002, “Foreign Currency Deposits in Vietnam—Trends and Policy Issues,” Vietnam: Selected Issues and Statistical Appendix, IMF Staff Country Report No. 02/5 (Washington: International Monetary Fund).
Comments from and discussions with Olaf Unteroberdoerster, Masahiko Takeda, and Kenneth Kang are gratefully acknowledged. The paper has also benefitted from discussions at the National Bank of Cambodia.
Banks are required to hold reserves in U.S. dollars (for foreign currency deposits) and in riel (for riel deposits). As of end-November 2010, the required reserve ratio on foreign currency is 12 percent, while that on riel is 8 percent. Required reserves are remunerated at one-half the Singapore Interbank Offered Rate (SIBOR).
Lao P.D.R. and Bangladesh were also assessed, but produced insignificant results given that they have low currency in circulation.
Moreover, the relatively fixed exchange rate conflicts with the need to facilitate adjustment to asymmetric shocks as well as to protect official reserves, given the limited lender-of-last resort capability under dollarization.